US Stocks Open Higher

By Dipo Olowookere 

The major U.S. index futures are pointing to a higher opening on Monday, with stocks likely to move to the upside following the mixed performance seen last week.

The upward momentum on Wall Street comes as traders seem to be expressing optimism about upcoming trade talks between the U.S. and China.

Trading activity may be somewhat subdued, however, with a lack of major U.S. economic data likely to keep some traders on the sidelines.

Stocks moved mostly higher over the course of the trading session on Friday after recovering from an early move to the downside. The Dow added to the substantial gain posted in the previous session to reach its best closing level in nearly six months.

The major averages gave back some ground going into the close but remained in positive territory. The Dow climbed 110.59 points or 0.4 percent to 25,669.32, the Nasdaq inched up 9.81 points or 0.1 percent to 7,816.33 and the S&P 500 rose 9.44 points or 0.3 percent to 2,850.13.

For the week, the major averages turned in a mixed performance. While the Nasdaq dipped by 0.3 percent, the S&P 500 climbed by 0.6 percent and the Dow jumped by 1.4 percent.

Late-day buying interest was seen after a report from the Wall Street Journal said Chinese and U.S. negotiators are drawing up a road map for talks to try to end their trade impasse.

Citing officials in both nations, the Journal indicated the plan would culminate in planned meetings between President Donald Trump and Chinese leader Xi Jinping at multilateral summits in November.

The report comes following yesterday’s news that China accepted an invitation from the U.S. for a new round of trade talks to be held later this month.

China’s Ministry of Commerce said that a Chinese delegation led by Vice Commerce Minister Wang Shouwen will travel to the U.S. for trade talks to be held with U.S. Under Secretary of Treasury for International Affairs David Malpass.

The Journal said the U.S.-China trade talks in Washington would take place on August 21st and 22nd, just before the next round of tariffs targeting $16 billion worth of goods on both sides kick in on August 23rd.

In U.S. economic news, a report from the University of Michigan unexpectedly showed a notable deterioration in U.S. consumer sentiment in the month of August.

The preliminary report said the consumer sentiment index dropped to 95.3 in August after edging down to 97.9 in July. Economists had expected the index to inch up to 98.0.

Surveys of Consumers chief economist Richard Curtin said the decrease in consumer sentiment was concentrated among households in the bottom third of the income distribution amid less favorable perceptions of market prices.

“Overall, the data indicate that consumers have little tolerance for overshooting inflation targets, and to the benefit of the Fed, interest rates now play a more decisive role in purchase decisions,” Curtin said.

Meanwhile, a separate report from the Conference Board showed a bigger than expected increase by its index of leading U.S. economic indicators in the month of July.

The Conference Board said its leading economic index climbed by 0.6 percent in July following a 0.5 percent increase in June. Economists had expected the index to rise by 0.4 percent.

“The U.S. LEI increased in July, suggesting the US economy will continue expanding at a solid pace for the remainder of this year,” said Ataman Ozyildirim, Director of Business Cycles and Growth Research at the Conference Board.

After falling sharply in recent sessions, gold stocks showed a substantial rebound on the day. The NYSE Arca Gold Bugs Index surged up by 2.5 percent, bouncing off its lowest closing level since early 2016.

The rebound by gold stocks came as the price of the precious saw further upside in electronic trading after ending the regular session only slightly higher.

Steel stocks also saw significant strength amid optimism about the trade talks between the U.S. and China, with the NYSE Arca Steel Index advancing by 1.3 percent. The index climbed further off the eight-month closing low set on Wednesday.

Tobacco, computer hardware, and retail stocks also saw notable strength, while most of the other major sectors showed more modest moves to the upside.